ESG Applications receive a combined score for each Program Participant service and a randomly assigned number to be used in the event of a tie. Per 24 CFR §576.100(b)(1), the amount of street outreach and emergency shelter funds awarded cannot exceed 60% of the total ESG funds available.

The first level of funding will be in the CoC region. Applications will be awarded funds in order of rank until either the funds are exhausted or until up to two Program Participant services decline a partial award of funds based on insufficient funding. Applicants offered a partial award would be able to adjust their performance targets and budget, but must retain their Application rank. Applications for street outreach and emergency shelter may be funded until the limit of 60% of emergency shelter/street outreach for the region is met, regardless of Application rank or availability of funding in the CoC region. Any unfunded Application may have opportunity to participate in the second and third levels of funding, depending on the availability of funds.

To continue with the example provided in "Topic: ESG Scoring Process," Applicant ABC and Applicant XYZ are in the same region, along with Applicant DEF. There is $200,000 available in the region. The scenario may result in the following:

A. Applicant XYZ is awarded rapid re-housing services for $50,000 with 90 points. This Program Participant service is fully funded, leaving $150,000 to be distributed to other Applicants within the CoC region.

B. Applicant ABC street outreach services is awarded for $50,000 with 80 points. This Program Participant service is fully funded, leaving $100,000 to be distributed to other Applicants within the CoC region. This Application uses 25% of the 60% cap on street outreach and emergency shelter.

C. For Applicant ABC who applied for emergency shelter services for $90,000 with 70 points, even though there is $100,000 available in the CoC region, this Program Participant service would be offered a partial award of $70,000 because an award of $90,000 would exceed 60% of the cap on street outreach and emergency shelter. For this scenario, the Program Participant service declined the partial award so that they can be eligible under for consideration under the second level of funding.

D. Applicant XYZ is awarded homelessness prevention services for $80,000 with 50 points. This Program Participant service is fully funded, leaving $20,000 in the CoC region to be combined with other unawarded funds to be distributed in the second level of funding.

E. For Applicant DEF who applied for rapid re-housing services for $60,000 with 40 points, this Program Participant service will be offered $20,000. For this scenario, the Program Participant service declined the partial award because it could not retain its Application rank with such reduced funding.

F. For Applicant DEF who applied for homelessness prevention services for $100,000 with 35 points, this Program Participant service may be offered $20,000. For this scenario, the Program Participant service declined the partial award because it could not retain its Application rank with such reduced funding. Since two Program Participant services declined a partial award, the $20,000 will be pooled with other funding for the second level of funding, regardless of whether there were other Program Participant services proposed in the CoC region.

The second level of funding will be for the CoC regions most underfunded. A CoC region is underfunded when total funds awarded through the first level of funding is less than the funds allocated per the Allocation Formula. For example, if a CoC region is allocated funds of $200,000, but the first level of funding resulted in an award of $100,000, then the region is 50% underfunded ($100,000/$200,000). The unawarded funds from the first level of funding is pooled and offered to each region in order of percent underfunded. One Application per underfunded CoC region will be offered an ESG award until the funds are expended, or until up to two Applicants decline a partial award. Applications for street outreach and emergency shelter may be funded until the limit of 60% of emergency shelter/street outreach for the state is met, regardless of Application rank or availability of funding.

The third level of funding will be for any unfunded Applications statewide in order of rank based on score. Applications for street outreach and emergency shelter may be funded until the limit of 60% of emergency shelter/street outreach for the state is met, regardless of Application rank or availability of funding.

What are the benefits or challenges of the first round of funding being limited to each CoC region?

What are the benefits or challenges of the second round of funding being available only to underfunded regions?

The way the 60% threshold is being calculated by region and total funding for the state versus each applicant seems to be the best option under this funding plan proposed.

1. What are the benefits or challenges of the first round of funding being limited to each CoC region?

Under the future application process, will CoCs be running the local competition again? There is limited transparency in this process which I would like to recommend not be an option in future applications.

My only other comment would be to keep the formula for allocations to region relatively consistent to ensure there are not big swings in funding allocations in regions each year.

2. What are the benefits or challenges of the second round of funding being available only to underfunded regions?

It is not clear how a CoC region could meet the underfunded definition except when there were not sufficient applications. However, the third level seems like a way to allow unfunded application scoring high but unfunded due to the competitive nature in some CoC's to have a chance to receive funding that was not allocated in other regions where there was not sufficient applications to expend all funds allocated.

The proposed rule would include an option for a local competition of ESG funds, which means the Department would work with the Continuum of Care (CoC) lead agency or its designee to run an ESG Application process and submit award recommendations to the Department.

A region may have an underfunded percentage if that region did not have enough Applications, or if two Applications ranked to receive an award during the first level of funding declined a partial award. In either scenario, an amount that was available in the CoC region was not awarded in that region, leaving the region underfunded compared to the allocated amount originally available.

Austin/Travis County previously submitted collaborative applications to TDHCA to ensure the ESG program and funding is appropriately spent on our residents highest needs. Currently, ESG funding in our region is primarily directed at Emergency Shelter, RRH, and HMIS in Austin/Travis County. Can TDHCA confirm that if 565k were still available in Austin/Travis County (that is our region's current funding), that funding can continue to be directed at the services we need most? Or does each ESG services (including Street Outreach and Homelessness Prevention) need to be provided in each region? We want to ensure that funding available in a region can be used for the services that are most essential.

We do not agree with having the second round of funding only be available to underfunded regions. How is an underfunded region quantified? It should be based on performance and community need.

Under the proposed rule, the first round of funding will be available to Applications received in each CoC region. It may be the case that Applicants may not apply for all Program Participant services in each CoC region.

Underfunded regions are determined by the amount that the CoC region was allocated according to the allocation formula compared to the amount that was awarded in the CoC region. No changes to the 2017/2018 ESG allocation formula are being proposed in the draft rule. The allocation formula takes into account four factors:

(1) Renter cost burden for households with incomes less than 30% Area Median Family Income, as released by HUD in the Comprehensive Housing Affordability Strategy data sets;

(2) Number of persons in poverty from the five-year estimates of the American Community Survey as released by the U.S. Census Bureau;

(3) Point-in-Time counts which are annual counts of sheltered and unsheltered persons experiencing homelessness during one day of the last two weeks of January required by HUD for CoC agencies; and

(4) The previous fiscal year's ESG funding, which is the amount of ESG funding received both by federal and state funding streams in the past year.

All factors are given equal weight of 50%. The previous fiscal year's ESG funding is given -50% weight in order to balance the positive weight of 150%.

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